Aareal Bank Group Company Profile:
Aareal Bank’s headquarter is located in Wiesbaden, Germany. It is one of the leading international property specialists. Its Staff comprising employees from 30 nations, it is represented across three continents such as Europe, North America and Asia. Shares are included in Deutsche Börse’s MDAX index, is the parent company of the Group. Under its management, the Group companies are operated in two business segments such as: Structured Property Financing and Consulting/Services.
Aareal Bank Group is Structured Property Financing segment. It facilitates property projects for domestic and international clients on three continents. The Bank offers financings for commercial property includes office buildings, hotel, retail, logistics and residential properties. The Bank’s particular strength lies in its success due to local market expertise and sector-specific knowledge. Beside local specialists, the Bank has expert teams for logistics properties, shopping centers and hotel financings at its disposal. This supports the Bank to offer financing concepts, tailored to specific requirements, anywhere in the world.
Consulting service segment of Aareal Bank offers services for clients in the housing and commercial property industry. It also provide service for energy and waste disposal markets, includes specialized banking services, electronic banking, automated settlement of mass payment transactions, and optimizing of higher level processes. It also assist on developing and providing IT services – an area in which it has almost 60 years’ experience. Aareal Bank achieved a reputation for itself on the capital markets as an active and reliable issuer of Pfandbriefe (German covered bonds), promissory notes and debt securities.
Aareal Bank Group Corporate History
The start-up phase of the Bank (1923-1933)
Germany was suffering from significant uncertainty of a serious economic crisis after the First World War. Inflation reached unheard dimensions and housing construction largely ground to intermit due to the destruction of private assets. As a consequence, there was a baneful housing shortage at that time.
The housing assistance companies were intended to create homes for repatriates and war displaced persons in order to effectively combat the prevailing need for housing. In this regard, the Deutsche Wohnstätten Bank AG by Prussian Wohnungsfürsorgegesellschaften (housing assistance companies), Preußische Landespfandbriefanstalt and some other companies in other German States took place in Berlin at that time. Deutsche Bau- und Wohnstätten-Bank AG was entry their name into the commercial register on 20 October 1923. Three (03) years later it was renamed Deutsche Bau- und Bodenbank AG (Bau- und Bodenbank for short).
Deutsche Bau- und Bodenbank AG from 1933 to 1945
As the housing shortage in Germany remained high, focus point of the Bank was bridging loan during the National Socialist regime. However, as the arms industry booming, new armament centers indicate that there was a need for accommodation for their many workers which increasingly dominated housing construction objectives.
The Bank was submerged into an existential crisis during that time due to politically opportune business activities. The government was increasingly withdrawing from housing construction due to growing military production volumes, even imposing a freeze on civil construction.
Reconstruction in Post-War Germany
Bau- and Bodenbank were suffering from the effects of the ruinous war. Many employees were missing and several branches were totally destroyed or damaged.
While the branches in the Eastern zone held by the Soviets were closed, the seven branches located in the Western zones held by the Americans and the British were soon able to restart their business activities. They were disconnected from the headquarters in Berlin and the influence of the Management Board and Supervisory Board.
It was not until the currency reform in 1948 that the Bank had the opportunity to overcome the consequences of this differentiation. The relocation regulation enabled the bank to take up residence in Frankfurt am Main in addition to its Berlin headquarters, thereby creating a base in the new currency area, and to legally and commercially reconsolidate branches located in the Federal Republic. At the end of 1949, the Bank fully restarts its business activities.
The Bank during the period of the “Economic Miracle”
Deutsche Bau- und Bodenbank benefited from the years of economic upturn. Initially, it was the only bank in the industry to offer this type of finance. From 1950 to 1967, the banks’s loan commitments amounted to DM 7.6 billion in total.
In order to process the extensive trust business on an even more cost-effective and efficient basis, the bank set up a data centre in Mainz which commenced operations in 1957. It was the first bank in Germany to own an electronic information system which offered centralized, external data processing to housing industry companies – a revolutionary concept at that time that created a new line of business for the Bank.
Developments during the 1990s
A range of subsidiaries was formed during the late 1980s and the 1990s in order to be able to provide property services across Germany as the lead bank for the housing industry. These accompanied companies strategically strengthened both the IT division and property management at both banks. The Bank’s IT Services Department was debuts in 1997 as an independent subsidiary called BauBoden Systemhaus GmbH. This became a group with a holding structure, which began to expand abroad, today known as Aareal AG with only a two years time period.
In March 1991, Deutsche Pfandbrief- und Hypothekenbank AG starts it shares for trading for the first time on various German stock exchanges while the government sold its interest. At the start of the nineties the Group expanded its then new commercial financing line of business in order to broaden its strategic base beyond private property financing.
In 1999, DePfa Deutsche Pfandbriefbank AG transferred all of its property and related operations to Deutsche Bau- und Bodenbank AG, which was established into the Group since 1979.
The Bank’s two core competencies in the field of property were defined in the Property Financing segment such as: focusing on commercial property and the Services segment.
The formation of Aareal Bank Group
The shareholders voted in favor of the strategic restructure of the DePfa Group at an extraordinary General Meeting held on 15 October 2001. This realignment aimed at creating two independent corporations with different business models. This process of separation that was carried out over several stages resulted in the formation of the property specialist DePfa Bank AG BauBoden based in Wiesbaden, which was renamed Aareal Bank AG, and DEPFA BANK plc, a public finance bank based in Dublin, with subsidiaries including the Germany-based DePfa Deutsche Pfandbriefbank AG.
This bank initially offered financial, asset management, advisory and IT services for national and international investors in the commercial property segment and for clients from the institutional housing industry.
Although Aareal Bank was broadly positioned thanks to this market strategy, the risks that came into being in the 1990s due to factors including extensive financings in the construction of housing in the new federal states noticeably impacted the Bank’s balance sheet between 2002 and 2005 in an increasingly difficult market environment.
Sustainability Mission Statement
A responsible business approach – our strategic benchmark
Aareal Bank Group’s sustainability mission statement validates corporate sustainability strategy, providing a summary of the corporate responsibility principles that are aligned with objective of doing sustainable business.
Sustainability management is driven by the following factors:
- To take an accumulated approach and broaden the areas of activity identified in strategic program to include social and ecological issues.
- To analyze trends historically, evaluate the resulting opportunities and risks, and align forward-looking sustainability program with this.
- To focus on all relevant stakeholder groups, seek to engage in active dialogue with them in a various way and show how make use of the insights have gained.
- To ensure that business decisions take account of ecological, social and governance factors and communicate progress and the challenges are facing transparently and credibly.
- To set priorities, utilizations of decisions and hence reinforce corporate sustainability values such as reliability, innovative ability, integrity and compliance, appeal as an employer, and building and maintaining high-trust client relationships.
Aareal Bank Group Company Structure
Quality – Key Factor For Success
Aareal Bank actively operates its market operation for more than 90 years, serving the needs of the property industry as a specialist bank. Reason for success is not only for banking business, but also in their role as a consultancy and IT systems house. There are people that along behind the success of Aareal Bank Group, who work on filling their new brand claim “Quality made by Aareal” with life, day by day and applying their own personal quality standards, with the aim to keep their promise and deliver quality.
They believe that, promise is a commitment and an incentive at the same time and quality at Aareal Bank has many forms that are, from their international profile and business expertise to velocity in responding to inquiries or making sound decisions, up to the tailor made solutions they develop for their clients with enthusiasm. All these aspects are reflected in the various statements of employees who gave them their personal opinion on the topic of quality.
Products, Consulting and Solutions
Speed, expertise and flexibility allow the Bank to give clients a head start in markets, an advantage that is crucial to the success of their office buildings, hotels, logistics and shopping centers. On that basis, they offer customized financing solutions with high structuring expertise in national and international commercial property financing.
Around the World, Around the Clock: They Finance Properties on Three Continents
The bank provides property financing solutions for both national and international clients on three continents such as: Europe, North America and Asia. Strength lies in the combination of local market expertise and special industry knowledge. Besides local experts, they have at disposal specialist teams for logistics, retail property and hotel financing packages.
Process Optimization / Housing Management
Automation generates time and cost advantages
The Bank has been tackling digitalization for a long time, something that is now seen as a megatrend. The major aim of the Bank’s key solutions is to relieve its customers of resource-intensive standard tasks by utilization of automated electronic processes. This increases the capacity to deal with the properties and tenants, or for strategic planning. It owes its position as market leader to two unique selling Points:
- Exclusive BK01 cooperative ventures on the basis of which BK01 is compact in leading housing industry ERP systems (in Blue Eagle, GES, Haufe wowinex, immotion, Karthago, Wodis Sigma, SAP RE);
- So-called BK01 account number, which forms an extremely versatile and unambiguous reference ID for payment items.
Both aspects taken together ensure extensive automated process chains in all areas of housing industry management: for incoming payments such as rental payments, monthly operating and property management expenses, membership dues for co-operatives or in payments for maintenance reserves and tenancy bonds. This is also the case with the many and varied accounts payable: tradesmen, utilities, and public authority’s et cetera. Automated processes reduce time consumption and the personnel requirements significantly.
Payment Transactions / Electronic Banking
Experience and security
The auto debits and credit transfers of the housing industry and the account debiting of suppliers, public authorities, utilities et cetera with respect to housing companies generate monthly mass payments which are processed promptly, smoothly and error-free in systems. There are more than 120 million postings each year and it is growing day by day.
Different accounts should maintain different business models for example, property accounts at companies with their own property holdings, or accounts for condominium owners’ associations kept by residential property managers pursuant to German law. The account management system of the Bank models the required accounts in systems, by customer.
Aareal Bank assures its electronic banking applications meet the highest security standards at all times. These applications allow access to the bank’s accounts to mandate single payments, release payments, manage authorizations or to read electronic information in automated mode. In the BK01 payment transaction system restraint of electronic banking functionalities from within the bookkeeping system, there is also the option of allocating and posting this account information automatically.
Comfort and Transparency
The custody management of tenancy bonds means both securing the quality of a property portfolio and a customer service. It provides electronic standard procedures to manage tenancy bonds, both as integrated BK01 processes (see also process optimization/housing management) and in the form of a combination of management software and electronic banking. The software can be used immediately, is easily understandable and designed around the life cycle of a tenancy bond, irrespective of the software used for other administration purposes.
The Bank processes naturally keep the statutory provision regarding the separating out of lessor assets. It guarantees account for each tenancy bond and the alternative of a collective trust account for all tenancy bonds that in this case too are invoiced and receive interest on an individual basis.
Sustainability for Liquidity
Aareal Bank has come through the global economic and financial crisis with system and success, and both investors and rating agencies have appreciated this. It has been in the black for all financial quarters of the entire crisis. Thanks to our sound business practice, conservative risk policy and the quality of our products, ever more market players in the housing and property sectors are placing their trust in us. Because our particular orientation to residential and commercial property and a high degree of professionalism guarantee sustainable performance across the board in times of crisis, and high standards for process flows.
Aareal Bank AG support its customers with personal consulting at seven branch offices also in respect of how to design a tailored investment mix. It enables active investment and cash management through an accounting system with certain technical features geared to each firm and oriented to its specific business model.
Whoever manages customer assets, looking for stability and longer-term appreciation in value cannot go past this asset class. Expertise and top service helps to gain competitive advantage in an increasingly specialized and global world of property.
Customer’s prospects of property management have grown: management costs are to be analyzed even more efficiently, more transparently and more strategically. The solutions of Aareal Bank for payment transactions have always been aimed at designing efficient processes able prompt and comprehensive reporting in this sensitive area of work.
Business models and strategies are in flux digitalization; new market options and a change in customer behavior are setting the pace from energy supplier and provider to energy manager. Aareal Bank has extended its commanding payment procedures into a comprehensive solution portfolio for the energy industry.
Integration and automation
BK01 is the name of an automated payment transactions system, tested for decades that simplifies, slims and accelerates processes by centralizing them into the bookkeeping system. BK01 solution portfolio is for the energy sector and ensures optimized allocation and posting rates in energy sector payment transactions.
The core function of BK01 payment management supplies unequivocal booking characteristics. It enables secure distribution of payments even with industry-specific complexities such as collectors, payments by “ARGE”, and cash payers. The system also permits next payment-related procedures to be mapped in automated processes, for both accounts receivable and payable. That is always in line with in-house prospects of efficiency on the one hand and transparency and control on the other.
Way ahead: Aareal 2020 – Adjust. Advance. Achieve.
The strategy for “Aareal 2020 is set as Adjust. Advance. Achieve”. Program for the future sets forth Aareal Bank Group’s strategic measures for attaining the goal of continuing its success story and creating value for all stakeholders on a sustainable basis. The achievement in the Adjust, Advance and Achieve dimensions are mapped via the four thrusts identified in the materiality analysis.